Dow Jones Futures Signal Market Rally; CrowdStrike Leads Earnings Movers, Tesla Rivals Report Sales

Dow Jones futures rose modestly early Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally paused Tuesday while Zoom Video Communications (ZM) plunged. CrowdStrike stock headlined earnings movers overnight. Nio (NIO) and other China EV makers reported monthly sales with Tesla stock just above an aggressive entry.

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CrowdStrike (CRWD), Anaplan (PLAN) and Ambarella (AMBA) reported earnings late Tuesday.

All three topped estimates. CRWD stock fell overnight while PLAN stock surged and AMBA stock popped.

Nio Sales

Nio reported August deliveries of 5,880, up 48% vs. a year earlier but down 26% from 7,931 in July. Nio cited record new orders but blamed supply-chain issues, almost certainly including chips, for hampering production.  It cut its Q3 delivery target to 22,500-23,500 from 23,000-25,000. Fellow EV startup Xpeng (XPEV) delivered 7,214 EVs, mostly its P7 sedan, up 172% vs. a year earlier. That’s down 10% from 8,040 in July. Xpeng will begin deliveries of its smaller P5 sedan, first production car with Lidar, in October. Li Auto (LI) sold 9,433 Li One SUVs, which have a small gas engine as a range extender. That’s 248% above a year earlier and up 9.8% from 8,589 in July.

China EV giant BYD Co. (BYDDF) will likely follow in a couple days. Li Auto and BYD recently reported earnings, following Nio and Xpeng earlier last month.

Nio stock fell 5% Wednesday morning, near multi-month lows. Xpeng stock retreated 3% after reclaiming its 50-day line Tuesday. Li Auto stock was little changed after rallying Tuesday to just below its 50-day. BYD stock, not yet active, is in a handle, near a buy point and all-time highs.

Tesla Stock

Industry reports should provide Tesla China sales in the coming weeks. Tesla’s local sales in China have fallen significantly from the first quarter, though it’s unclear to what extent that reflects weakening demand or a lack of supply. Tesla (TSLA) is now exporting much of its Shanghai plant production, especially in the first two months of the quarter, mostly to Europe. Tesla is exporting the made-in-China Model Y to Europe for the first time. Tesla began delivering a cheaper, lower-range Model Y Standard Range variant in China in August.

Tesla stock rose 0.7% to 735.72 on Tuesday, extending Monday’s move above an aggressive buy point of 730. Shares were steady early Wednesday.

Snap Rises, Zoom Stock Dives

Snap (SNAP) rose 2.15% to 76.11, clearly breaking a trend line entry after reclaiming an old 73.69 buy point on Monday. Snap stock also has a 79.28 entry from a new flat base.

Zoom stock topped second-quarter forecasts, but growth is slowing. The videoconferencing leader guided slightly lower for the current Q3 and for full-year revenue. ZM stock plunged nearly 17% to 289.50, not far from a 2021 low. Heading into earnings, Zoom stock had been trading below its 50-day and 200-day lines. A huge pandemic winner in 2020, ZM stock offered several big sell signals late last year and in early 2021.

Tesla and SNAP stock are on IBD Leaderboard. TSLA stock also is on SwingTrader. It was Tuesday’s IBD Stock Of The Day. CRWD stock is on the IBD 50.

The video embedded in this article looked at Tesla, Zoom and SNAP stock.

Dow Jones Futures Today

Dow Jones futures rose 0.4% vs. fair value. S&P 500 futures gained 0.4%. Nasdaq 100 futures climbed 0.4%.

Copper futures fell solidly.

The ADP employment report estimated private payrolls rose by 374,000 in August, less than forecasts for 500,000.

The private Caixin manufacturing index sank 1.1 points to 49.2, below the break-even 50 level for the first time since April 2020. A day earlier, the official factory gauge dipped 0.1 point to 50.1, while the nonmanufacturing gauge slid to 47.5.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

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Stock Market Rally Tuesday

The stock market rally had a quiet session, with the major indexes trading in a narrow range.

The Dow Jones Industrial Average dipped 0.1% in Tuesday’s stock market trading. The S&P 500 index also edged down 0.1%. The Nasdaq composite lost a fraction. The small-cap Russell 2000 rose 0.2%.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) dipped 0.3%. The iShares Expanded Tech-Software Sector ETF (IGV) retreated 0.6%. CRWD stock and Snap are IGV components. The VanEck Vectors Semiconductor ETF (SMH) sank 0.8%.

SPDR S&P Metals & Mining ETF (XME) fell 0.5% and Global X U.S. Infrastructure Development ETF (PAVE) gave up 1.1%. U.S. Global Jets ETF (JETS) climbed 1%. SPDR S&P Homebuilders ETF (XHB) dipped 0.8%. The Energy Select SPDR ETF (XLE) slumped 0.7% and the Financial Select SPDR ETF (XLF) edged down 0.1%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 0.6% and ARK Genomics ETF (ARKG) climbed 0.9%. Tesla stock is the top holding across ARK Invest’s ETFs. Zoom stock is a notable ARKK component.

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CrowdStrike Earnings

CrowdStrike earnings modestly beat Q2 views while the cybersecurity leader guided up on revenue and in line for EPS. CRWD stock fell 3% in extended trade. Shares dipped 1.9% to 281 on Tuesday, after rising for nine straight sessions.

Ambarella earnings topped views, with EPS up 483% as revenue growth accelerated to 58%. The video-processing chip maker also gave bullish revenue guidance. AMBA stock jumped 9% early Wednesday. Ambarella stock fell 1.8% on Tuesday to 103.57, just above its 50-day and 200-day lines. Shares could offer an early entry Wednesday.

Anaplan reported a smaller-than-expected loss while beating on revenue and guiding higher on sales. PLAN stock surged 16% in premarket action. Shares fell 2.3% on Tuesday to 59.98, hitting resistance at their 200-day line.

Market Rally Analysis

The stock market rally paused Tuesday, but it was normal, healthy action. The Nasdaq and S&P 500 are right at record highs while the Dow Jones is just below all-time levels. The Russell 2000 is holding modestly above its 50-day line.

The Nasdaq and Nasdaq 100 weren’t extended at Monday’s close, but after seven of the prior eight sessions, tech stocks could use some sideways action.

Not many new stocks were actionable Tuesday. Tesla and Snap stock moved higher into buy areas after just closing in range on Monday.

On the flip side, there wasn’t a lot of damage either. Wells Fargo (WFC) sold off, dropping below a buy point and its 50-day line on a report that it could face regulatory action over the pace of restitution. But financials overall held up after sinking Monday. Steel stocks fell solidly, but are within mini-consolidations.

Time The Market With IBD’s ETF Market Strategy

What To Do Now

How aggressive should you be in this stock market rally? A big factor is how well you’re doing. If you hold leading stocks in top sectors, you might be stepping on the gas over the past week or so — though not necessarily on Tuesday. But if you’re not making any headway, that’s a sign that either leading stocks aren’t faring well or you’re not in synch with the market rally — either way not a reason to increase exposure.

Continue to evaluate your portfolio. Do you have losers that are weighing down overall performance? Are you too concentrated in software, IPOs or chips? Build up your watchlists with an eye toward buying leading stocks from a variety of sectors.

Most of all, don’t get locked into a bullish or bearish mindset. When the market rally rebounded from key levels on Aug. 19, many buying opportunities appeared over the next few days. If the market rally sours and leading stocks slash gains, investors should start being more defensive.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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